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Home loan repayments up a massive 46.66%



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KELVIN THOMSON

Media Release from the Shadow Minister for Regional Development and Roads, Shadow Minister for Housing and Urban Development

HOME LOAN REPAYMENTS UP A MASSIVE 46.66%

The dream of home ownership remains out of reach for many Australian families with new data showing average monthly repayments have skyrocketed during the past three years.

Data from the Real Estate Institute of Australia and AMP shows that in the June 2001 quarter the average monthly repayment on new home loans was $1018 per month. Three years later, in June 2004, average monthly repayments have risen to $1493 per month - a massive 46.66% increase.

Repayment increases have far outstripped earnings increases of 15.14% during the same period.

This fall in housing affordability has placed financial pressure on Australian families who have suffered a dramatic increase in the proportion of family income devoted to meeting home loan repayments. In just three years the average Australian family has gone from paying one quarter of the family income on home loan repayments to now paying one third - 25.1% in June 2001; 32.3% in June 2004.

Interest rates have also risen from 6.8% to 7.05% during this period, compounding the problems caused by rising house prices at a time when interest rates around the world have fallen, but Australia's have not.

The Howard Government needs to show greater fiscal discipline and put downward pressure on rates, or home ownership in Australia will continue its steady march out of reach of young Australian families.

Australia now has higher interest rates than any other OECD country save for New Zealand. The Howard Government’s budgetary policy has failed to put downward pressure on interest rates, and on the contrary the Reserve Bank is talking about the next move on interest rates being up. /Ends Canberra 01/12/2004 Graphs of Australia’s average monthly repayments on new loans, and percentage of family income spent on new loan repayments, are attached. Raw data is available on request. Contact: Cora Trevarthen 0418 770 484

Au s tra lia

% family income spe nt on new loan repayments

0

5

10

15

20

25

30

35

J u n

- 0 1

Au g

- 0 1

O c t -0

1

De c

- 0 1

Fe b

- 0 2

Ap r -0

2

Ju n

- 0 2

Au g

- 0 2

Oc t-0

2

De c

- 0 2

Fe b

- 0 3

Ap r -0

3

J u n

- 0 3

Au g

- 0 3

O c t -0

3

De c

- 0 3

F e b

- 0 4

Ap r -0

4

Ju n

- 0 4

P e r c

ent

Au s tra lia

A v e r a g e m o n t h l y r e p a y m e n t s o n n e w l o a n s

0

200

400

600

800

1000

1200

1400

1600

Ju n

- 0 1

Au g

- 0 1

Oc t-0

1

De c

- 0 1

Fe b

- 0 2

Ap r -0

2

Ju n

- 0 2

Au g

- 0 2

O c t -0

2

De c

- 0 2

Fe b

- 0 3

Ap r -0

3

Ju n

- 0 3

Au g

- 0 3

Oc t-0

3

De c

- 0 3

Fe b

- 0 4

Ap r -0

4

Ju n

- 0 4

Do lla

r s

Source: Real Estate Institute of Australia and AMP, Home Loan Affordability Report.